The Freddie Mac Primary Mortgage Market Survey this week is showing mortgage rates moving lower for the first time in 2018. With rates on the decline (for now) we strongly recommend that anyone looking to purchase a home or refinance their current mortgage takes action soon. Read on for more details.
Where are mortgage rates going?
Rates fall in Freddie Mac PMMS
It’s Thursday after 10:00am, so that means that the Freddie Mac Primary Mortgage Market Survey got released. We’ve got a notable report out this week, with mortgage rates falling for the first time in 2018. Here are the numbers:
The average rate on a 30-year fixed rate mortgage fell two basis points to 4.44% (0.5 points)
The average rate on a 15-year fixed rate mortgage fell four basis points to 3.90% (0.5 points)
The average rate on a 5-year adjustable rate mortgage increased four basis points (0.4 points)
Here is what the Freddie Mac Economic and Housing Research Group had to say about mortgage rates this week:
“Tuesday’s Consumer Price Index report indicated inflation may be cooling down; headline consumer price inflation was 2.2 percent year-over-year in February. Following this news, the 10-year Treasury fell slightly. Mortgage rates followed Treasurys and ended a nine-week surge. The U.S. weekly average 30-year fixed mortgage rate fell 2 basis points to 4.44 percent in this week’s survey, its first decline this year.”
It’s always important to note that data for the survey was collected early on in the week and therefore doesn’t necessarily reflect current market conditions.
The downward trend has not reversed itself quite yet, though, and has actually continued throughout the week. Yesterday’s soft Producer Prices and Retail Sales readings certainly played a part in keeping rates lower.
If we take a look at the yield on the 10-year Treasury note, which is the best market indicator of where mortgage rates are going, we can see that it’s down to 2.81% right now.
That’s nine basis points below is highest position of the week on Monday. Mortgage rates typically move in the same direction as the 10-year yield, so rates are even lower right now than in the PMMS.
Rate/Float Recommendation
Lock now before rates push higher
Mortgage rates are on track to finish out the week lower for the first time in 2018. This is obviously great news for anyone looking to buy a home or refinance their current mortgage.
We strongly recommend that you take action now while rates are low because the long-term trend remains for rates to move considerably higher; many analysts are still calling for the 30-year fixed rate to move above 5% sometime this year.
It really only takes a few minutes online or a quick phone call to one of our experienced mortgage professionals to get started.
Learn what you can do to get the best interest rate possible.
Today’s economic data:
Jobless Claims
Applications for U.S. unemployment benefits came in at 226,000 for the week of 3/10/18. That puts the 4-week moving average at 221,500. This is a drop of 4,000 for new claims, which points toward strength in the labor market.
Philadelphia Fed
The Philly Fed’s general business conditions index hit a 22.3 in March. That’s below the prior reading but the details of the report are incredibly strong, with new orders and unfilled orders coming in hot.
Empire State Mfg Survey
The Empire State General Business Conditions Index also posted a strong reading this morning, coming in at 22.5. That’s well above the 15.0 that analysts had expected.
Import and Export Prices
Import prices ticked up 0.4% from the previous month in February, putting them at 3.5%, year over year. Export prices rose 0.2%, month over month, bringing the year over year change to 3.3%.
Housing Market Index
The Housing Market Index for March hit a 70. That’s still a positive reading but it is a little below the 72 that analysts had expected.
Notable events this week:
Monday:
10-Yr Note Auction
Tuesday:
NFIB Small Business Optimism Index
Consumer Price Index
Wednesday:
PPI-FD
Retail Sales
Business Inventories
EIA Petroleum Status Report
Thursday:
Jobless Claims
Philadelphia Fed
Empire State Mfg Survey
Import and Export Prices
Housing Market Index
Friday:
Housing Starts
Industrial Production
Consumer Sentiment
JOLTS
*Terms and conditions apply.
Carter Wessman
Carter Wessman is originally from the charming town of Norfolk, Massachusetts. When he isn’t busy writing about mortgage related topics, you can find him playing table tennis, or jamming on his bass guitar.
We had a few times in the previous cycle where the 10-year yield was below 1.60% and above 3%. Regarding 4% plus mortgage rates, I can make a case for higher yields, but this would require the world economies functioning all together in a world with no pandemic. For this scenario, Japan and Germany yields need to rise, which would push our 10-year yield toward 2.42% and get mortgage rates over 4%. Current conditions don’t support this.
The backstory
The lifeblood of my economic work depends greatly on the ebbs and flows of the 10-year yield, even more than mortgage rate targeting, which is unusual for a housing analyst.
When I first dipped into 10-year yield and mortgage rate forecasting in 2015, during the previous expansion, I said the 10-year yield will remain in a channel between 1.60%-3%. I’ve stuck to that channel forecast every year since — and for the most part that 10-year yield channel stuck. That range dictated that mortgage rates would roughly stay between 3.5%-4.75%.
When COVID-19 was about to hit our economy, I forecasted that the 10-year yield recessionary yields should be in a range between -0.21%-0.62%. We got to as low as 0.32% on that Monday morning in March when the crisis was hitting the markets the hardest. About a month later, I published my AB (America is Back) recovery model, which said that the 10-year yield should get back toward 1%. We got there in December of 2020 so I was able to retire my America is Back recovery model.
I said that when the economy was beginning the new expansion, the 10-year yield would create a range between 1.33%-1.60%. This couldn’t happen in 2020 but should happen in 2021. Even with the hot economic growth, the hottest inflation data in decades, and the Fed rate hike discussion picking up, this range of 1.33%-1.60% has held up nicely for most of 2021, meaning mortgage rates were going to be low in 2021.
My forecast for the 10-year yield range in 2021 was 0.62%-1.94% which translates to a bottom-end range in mortgage rates of 2.375%-2.5%, and an upper-end of 3.375%-3.625%. Single mortgage rate target forecasts have not fared well over the decades because these forecasters did not respect the downtrend in bond yields since 1981.
The X factor
Can there be a bond market sell out short term, sending yields above 1.94%, like what we saw early in the COVID-19 crisis? Yes, but if the markets do overreact for any reason, typically bond yields would fall back. Why do I not believe bond yields will push higher aggressively? The economic rate of growth peaked in 2021. The economy was on fire this year, and inflation data was super-hot. Even so, the highest the 10-year yield got was 1.75%. The economic disaster relief that boosted the recovery in 2020 and 2021 has been drawn down.
Government spending plans have also been watered down and new legislation might not even pass at all. Economic growth peaked in 2021 and some of the hotter inflation data has the potential to fall next year. The Federal Reserve wants to hike rates to cool the economy. Typically what happens before the first Fed rate hike is that the U.S. dollar has its biggest percent move higher ,which tends to hurt commodity prices and world growth. This is something to watch for next year as it could slow down world growth.
The economy won’t be as hot in 2022 as it was in 2021, but it will remain in expansionary mode. This type of backdrop will make it challenging for rates to rise in a big way and stay higher. The key with all my 10-year yield channel work is how long the 10-year stays in that channel during the calendar year. I have always believed this type of forecast is more useful than targeting a mortgage rate.
Existing-home sales
The forecast
For 2022, I am forecasting the same sales trend range as 2021 of about 5.74 million to 6.16 million. If monthly sales prints are above 6.16 million for existing homes, then I would consider the market more robust than expected. If sales trend toward 5.3 million then we will be back to 2019 levels. This would still be healthy sales considering the post-1996 trend, but it will mean housing demand has gotten softer.
This has happened before when higher rates have impacted demand. This is why since the summer of 2020 I have written about how if the 10-year yield can get above 1.94%, then things should cool down. However, as you can see it’s been hard to bond yields over that level and thus mortgage rates above 3.75%.
The backstory
If the last two reports of the year on existing home sales are above 6.2 million, I will admit that sales have slightly outperformed what I predicted for 2021. Early in 2021, I wrote that home sales would moderate after the peaks caused by the COVID-19 shutdown make-up demand and that readers should not overreact to this slowing. I wrote that sales would range between 5.84 million and 6.2 million, and that we could anticipate a few prints under 5.84 million — but sales would consistently be above the closing level of 2020 of 5.64 million. We got one print below 5.84 million and a few recent prints over 6.2 million, with two more reports. Mortgage demand was solid all year long and has picked up in the last 15 weeks.
One of my longer-term forecasts in the previous expansion was that the MBA Index would not reach 300 until 2020-2024. We got there in the early part of 2020, then the Index got hit by the COVID-19 delays in home buying to only have a V-shaped recovery that led to the make-up demand surge, moderation down and back to 300.
As you can see, it’s been like Mr. Toad’s wild ride here. We will still have some COVID-19 year-over-year comps to deal with up until mid February and then we can get back to normal. However, one thing is for sure: demand has been solid and stable in 2020 and 2021. Also, the market we have today doesn’t look like the credit boom we saw from 2002-2005.
I didn’t believe total home sales could get to 6.2 million in the years 2008-2019, this is new and existing home sales combined. We simply didn’t have the type of demographics in the previous expansion. We are in different times.
New home sales and housing starts
The forecast
My long-term call from the previous expansion has been that we won’t start a year at 1.5 million total housing starts until the years 2020-2024 and we have finally gotten here much like the 300 level in the MBA index. My rule of thumb has always been to follow the monthly supply data for new homes, and as long as monthly supply is below 6.5 months on a three-month average, they will build.
The backstory
Housing starts, permits and builders confidence are ending the year on a good note. Even though new home sales aren’t booming this year, it’s good enough to keep the builders building more homes even with all the drama of labor shortages, material cost and delays in finishing homes.
As you can see below, the uptrend has been intact even with the slowdown in 2018 and the brief pause from COVID-19.
The new home sales sector gets impacted by rates much more than the existing home sales marketplace. The last time this sector saw some stress from mortgage rates was in 2018 when rates were at 5%. Today’s 3% mortgage rates are good enough to keep things going. We should see slow growth in new home sales and housing starts as long as the monthly supply of new homes is below 6.5 months on a 3-month average. This sector has legs to walk forward slowly. I have never believed in the housing construction boom premise as mature economies don’t have construction booms with slowing population growth. More on that here.
The X factor
The one concern I have for this sector in 2022 is if the builders keep pushing the limits of home price growth to make their margins look better. When rates are low, they have the pricing power to do this. This is why the sector has done so well in 2021. If I am wrong about mortgage rates staying low in 2022, and rates go above 3.75% with duration, then demand for new homes should get hit. The longer-term concern for this sector is price growth because if demand slows down, this means a slowdown in construction and the builders really maximized their pricing power in 2020 and 2021.
Home prices
The forecast
I am looking for total home-price growth to be between 5.2% and 6.7% for 2022. This would be a meaningful cool down in price growth but would still be a third year straight of too much price growth for my taste.
The backstory
My biggest fear for the housing market during the years 2020 to 2024 was that real home-price growth can be unhealthy. When you have the best housing demographic patch ever recorded in history occurring at the same time as the lowest mortgage rates ever, with housing tenure doubling as it has in the last 12 years, it’s the perfect storm for unhealthy price growth.
Housing inventory has been falling since 2014 and mortgage purchase applications have been rising since then. As you can see below, 2021 wasn’t looking good for me regarding my fear for home prices rising too much.
The X factor
When I talk about real home-price growth being too hot, I mean that nominal home price growth is above 4.6% each year during the five-year period of 2020 to 2024, for a cumulative 23% growth. This would not be a positive for the housing market. If we end 2021 with 13% home price growth, (and it looks like we will do that or higher), then we have already achieved 23% of the price growth that I am comfortable with in just two years.
While I do believe home-price growth is cooling from the extreme high rate of growth we had earlier in the year, I would very much like to see prices get back in line with my model for a healthy market. In order for this to happen, we would need to have no increase in home prices for the next three years. Because inventory levels are falling again, and we are at risk of starting the 2022 spring season at fresh new all-time lows, this outcome is very unlikely.
Early in 2021, I had raised concerns that prices overheating should be the main concern, not forbearance crashing the market. When demand is stable, it’s extremely rare for inventory to skyrocket and American homeowners have never looked better on paper. In fact, a few months ago I talked about inventory falling again should be the concern going out.
Housing demand
The forecast
Everyone is talking about rates going higher and no one, it seems, is talking about the possibility that mortgage rates could go under 3% in 2022, except me. This is front and center in my mind. I want to see a B&B housing market: boring and balanced. In a B&B market, buyers have choices, sales move at a reasonable pace without bidding wars, and the whole home-buying experience is less stressful and more sane. I would like to see inventory get toward 1.52 – 1.93 million, (which is still historically low). However, this will be a more stable housing market.
The backstory
Millions of people buy homes each year. The only thing that cooled demand for housing in the previous expansion was mortgage rates going over 4% with duration. The increase in rates didn’t crash the market or even facilitated negative year-over-year home price declines; but it did increase the number of days homes stayed on the market.
Currently the biggest demographic patch ever recorded in U.S. history are ages 28-34, the first-time homebuyer median age is 33. When you add move-up, move-down, cash and investor demand together, demand will be stable and hard to break under the post-1996 trend of 4 million plus total sales every year in the years 2020-2024.
The X factor
Frankly, I’m getting tired of calling this market the unhealthiest since 2010. This is not due to a massive credit boom or exotic loan products contaminating the market with excess risk — it’s the lack of choice for buyers. If mortgage rates go under 3%, which I believe they can, it just keeps the low inventory story going on. The Federal Reserves wants to cool down the economy, the government is no longer providing disaster relief anymore and the world economies should get hit if the U.S. dollar gets too strong. So, my concern is about rates falling in year three of my 2020-2024 period. This is also a first-world problem to have and we aren’t dealing with the housing market of 2005-2008 when sales were declining and the U.S. consumer was already filing for bankruptcy and having foreclosures before the great recession started in 2008. This is to give you some perspectives here with my thinking.
The economy
The forecast
I expect the rate of change to slow in 2022 but the economy will still be expansionary. Retail sales have been off the charts, and this data line, which I expected to moderate, still hasn’t. The rate of growth will cool. Replicating the growth we saw in 2021 will be nearly impossible. As the excess savings have been drawn down and the additional checks that people got are no longer coming, this data line will find a more suitable and sustainable trend in 2022. Still I am shocked that moderation hasn’t happened already and I was the year 2020-2024 household formation spending guy, too.
The backstory
The U.S. economy has been on fire this year. Even with the excess savings, good demographics, and low rates, not even I thought we would see economic growth like we did in 2021. However, like all things in life, despite the peaks and valleys, the overall trend will prevail.
The X factor
I recently raised one of my six recession red flags after the most recent jobs report as the unemployment rate got to a key level for myself. These red flags are more of a progress checklist in the economic expansion, and when all six of my flags are raised, I go into recession watch. The economy is in a more mature phase of expansion since the recovery was so fast. Like everything with me, it’s a process to show you the path of this expansion to the next recession.
For housing, a strong labor market means more people are getting off forbearance, which is already under 1 million, much smaller than the nearly 5 million we had early in the crisis. I want to wish a Merry Christmas to all my forbearance crash bros who promised a housing crash in 2020 and 2021. You guys are the best trolling grifters ever!
More jobs and more robust wage growth mean the need for shelter will grow. The housing market is already dealing with too much rent inflation, but as wage growth picks up on the lower end, this means landlords will charge more rent. Again, this the problem you want to have, a tighter labor market means wage growth will pick up and we have 11 million job openings currently.
So, look for the rent inflation story to be part of the 2022 storyline, as well as the rate of growth of home prices cooling down.
There is nothing like a fifth wave of COVID-19 and a new highly transmissible variant to crank up the personal stress meter. While the continuing COVID crisis can cause havoc on some short-term data lines for the economy, we will, as we have done, get through this and move forward. Our reality is that, as a nation, we have learned to consume goods and services with an active virus infecting and killing us every day.
The St. Louis Financial Stress Index, which was a key data line to track for the America Is Back recovery model, has still been in a calm zone for the entire year, currently at -0.8564. When we break over zero — which is considered normal stress — then we have some market drama. However, that wasn’t the storyline in 2021 and we didn’t have a single day where the S&P 500 was in correction mode. It’s not normal to not have a stock correction, so a stock market correction in 2022 is in the works and this can lead more money into bonds and drive rates lower.
For more discussion on this index and the America is Back recovery model, this podcast goes over everything that has happened in 2020-2021.
Conclusion
What a ride it has been for all of us since April 7, 2020 when I wrote the America Is Back economic recovery model for HousingWire. We end 2021 with one of the greatest economic recovery stories ever in the history of the United States of America, and a terrible, dark, two-year period of failure for the extreme housing bears. Now we are well into a recovery and looking forward to a new year with its new challenges.
The job of the analyst is to forecast the positive or negative impacts that a whole slew of variables have on the economy based on carefully formulated economic models. The variables, such as demographics, the unemployment rate, what the Federal Reserve is doing, commodity prices and so many others, are constantly in flux and feed off of and influence one another. Additionally, new economic variables pop up all the time. My job, with every podcast and article, is to show you how the changes in these variables light the path to where the economy and the housing market is heading.
Take a deep breath — in through the nose and out through the mouth. The last two years have been crazy, but I am glad you are here to read this. This is our country, our world and our universe, and everyone is part of team Life on Earth. Merry Christmas, Happy Holidays and have a wonderful Happy New Year. We will get through 2022 one data line at a time.
“We have always held to the hope, the belief, the conviction that there is a better life, a better world, beyond the horizon.” Franklin D. Roosevelt
After rising yesterday, mortgage rates are on the decline today due to increased trade tensions between China and the U.S. President Trump is expected to reveal tariffs on a variety of Chinese imports later today and the expectation is for China to respond with their own tariffs. Read on for more details.
Where are mortgage rates going?
Rates fall on trade war concerns
The big news yesterday was the Federal Reserve raising the nation’s benchmark interest rate–the federal funds rate–by a quarter basis point up to 1.50%-1.75%.
The Fed also reiterated their position that a total of three rate hikes in 2018 will be necessary, and even more notable was the fact that the number of FOMC members that felt four rate hikes are needed crept up from the prior meeting’s four to seven.
Financial market participants had been largely anticipating a somewhat more cautious tone from the Fed, and while that did happen, the increase in aggressive sentiment is what investors were most moved by.
We saw the yield on the 10-year Treasury note (the best market indicator of where mortgage rates are going) move up during early trading yesterday ahead of the announcement and those levels were held for most of the day once the news broke.
The yield did retreat by a couple basis points but still held close to a one month high. That brings us to today, when the 10-year yield is down about eight basis points to 2.80%. That’s a full tenth of a point lower from yesterday’s high of 2.90%.
Rate/Float Recommendation
Lock now while rates are down
Mortgage rates are way down today. It’s certainly been a roller-coaster ride the past 24 hours for anyone who has been following along with the news-cycle.
With rates down, right now is the perfect time to lock in a rate on a purchase or refinance. It only takes a couple minutes online to get started or a quick phone call to a loan officer to find out what your options are.
As the Fed made clear yesterday, interest rates, and subsequently, mortgage rates are going to rise throughout 2018. This means that anyone looking to buy or refinance will likely get the better deal by locking in a rate sooner rather than later.
Learn what you can do to get the best interest rate possible.
Today’s economic data:
Jobless Claims
Applications for U.S. unemployment benefits ticked up to 229,000 for the week of 3/17/18.
FHFA House Price Index
The FHFA House Price Index moved up 0.8% in January. That puts the year over year change at 7.3%.
PMI Composite Flash
Manufacturing PMI ticked up to 55.7 in March. Services moved a little lower down to 54.1, and the composite reading also moved lower to 54.3. Overall, it’s not quite as strong a report as analysts had expected.
Notable events this week:
Monday:
Tuesday:
FOMC Meeting Begins
Wednesday:
Existing Home Sales
EIA Petroleum Status Report
FOMC Meeting Announcement and Press Conference
Thursday:
Jobless Claims
FHFA House Price Index
PMI Composite Flash
Friday:
Fedspeak
Durable Goods
New Home Sales
*Terms and conditions apply.
Carter Wessman
Carter Wessman is originally from the charming town of Norfolk, Massachusetts. When he isn’t busy writing about mortgage related topics, you can find him playing table tennis, or jamming on his bass guitar.
Jobless claims data recently hit levels last seen in 1969.
With that said, the household survey jobs data is much stronger, showing an average three-month gain of 723,000 versus the BLS data running at 365,000. We do have enough labor to get back to pre-COVID-19 levels and I do expect over time to see significant positive revisions to jobs data this year. I have been counting the months to see if my forecast would be correct.
With nine months left until the end of September 2022 (the milestone in my forecast), let’s see how much progress we need:
Feb 2020: 152,553,000 jobs
Today: 148,951,000 jobs
That leaves 3,602,000 jobs left to gain in the next 9 months, which is 400,222 jobs per month. With a 3.9% unemployment rate!
Here is a look at the job gains and losses reported today. Construction jobs came in positive but we still have a fairly high level of construction job openings currently. The lack of construction productivity over the decades has been one reason why I have never believed in a housing construction boom in America. The other reason is that the builders don’t ever oversupply a housing market, so when demand fades, so will construction.
The builders have been complaining about labor for many years. However, the builders confidence index has picked up because they believe they can sell their product and make money since they have pricing power. This also means housing starts are rising. Don’t make it more complicated than it needs to be.
Remember that when looking at jobs data, it’s always about prime-age employment data for ages 25-54. The employment-to-population percentage for the prime-age labor force is 1.5% away from being back to February 2020 levels. The jobs recovery in this new expansion has been much better than we saw during the recovery phase after the great financial crisis.
Education and employment
Most people who want to work in our country are employed on a regular basis. I know that some people blame COVID-19 for not going back to work, but context is key: the majority of the country’s population is working today. The part of the labor force with the least educational attainment tends to have a higher unemployment rate. On Twitter, I started the hashtag A Tighter Labor Market Is A Good Thing to remind everyone that the economy runs hot when we have a tighter labor market. We want to see the kind of unemployment rates that college-educated people have spread to everyone, because we have tons of jobs that don’t need a college education.
The unemployment rate for those that never finished high school has been falling sharply lately, which means the labor market is getting tighter and tighter every month. You want to have this problem rather than the other way around.
Here is a breakdown of the unemployment rate and educational attainment for those 25 years and older: —Less than a high school diploma: 5.2%. —High school graduate and no college: 4.6%. —Some college or associate degree: 3.6. —Bachelor’s degree and higher: 2.1%.
As you can see above, life is great for those looking for a job. For companies that need labor, it’s not the best news, but again, it’s first-world American problems — the economy is hot! As I have stressed from April 7, 2020, the U.S. recovery was going too fast, which would shock many people because they had no faith in their economic models.
With near record-low unemployment and massive job openings, you would assume mortgage rates should be skyrocketing, but they’re not.
The 10-year yield and mortgage rates
My 2022 forecast said: For 2022, my range for the 10-year yield is 0.62%-1.94%, similar to 2021. Accordingly, my upper end range in mortgage rates is 3.375%-3.625% and the lower end range is 2.375%-2.50%. This is very similar to what I have done in the past, paying my respects to the downtrend in bond yields since 1981.
We had a few times in the previous cycle where the 10-year yield was below 1.60% and above 3%. Regarding 4% plus mortgage rates, I can make a case for higher yields, but this would require the world economies functioning all together in a world with no pandemic. For this scenario, Japan and Germany yields need to rise, which would push our 10-year yield toward 2.42% and get mortgage rates over 4%. Current conditions don’t support this.
Yes, it does seem strange, we have the hottest economy in decades and inflation is hot but the 10-year yield as I write this is at 1.75%. Don’t forget the trend is your friend on bond yields and mortgage rates for decades. We had a major fall in headline inflation that didn’t take bond yields lower in the same way in 2009-2010 and now you’re seeing the reverse with a short-term spike in the inflation rate of growth with yields not rising either.
Even though we haven’t tested 1.94% yet, we are getting to an exciting area where we might be able to see the first real test of 1.94% since 2019. Keep an eye on the close of the 10-year yield today and see if we get some bond market sell-off next week. If not, the bond market can rally and yields can fall short term as we are oversold on the bond report.
Economic cycle update
Now for an economic update. So far, so good, even with the Omicron cases exploding higher, we simply don’t see the economic and market reacting any more as we have learned to consume goods and services with an active virus infecting and killing us each day. This has been the case since the second surge in 2020, and even though sectors of the economy will not perform at total capacity with cases rising, it’s just not like what we saw in March of 2020.
The St. Louis Financial Stress Index, a crucial variable in the AB recovery model, is still acting bored out of its mind with a recent print of -0.9201%. This will rise when the markets react to stress, so don’t assume we will be at these low levels forever. We still haven’t had a stock market correction of 10% plus since the March lows in 2020.
The leading economic index has been very solid lately, when this data line falls for 4-6 months straight, then the topic becomes different. However, this hasn’t been the case, it bottomed in April of 2020 and has had a sharp rebound.
Retail sales are still off the charts, but I don’t believe we can have the type of growth we saw last year. Moderation is the key to retail sales data going out, but what a crazy ride in 2021. Expect less purchases on goods and more service spending going out, especially when we are finally done with COVID-19.
The personal savings rate and disposable income are very healthy to keep the expansion going! Even though the disaster relief has faded from the economic discussion, both these levels are good to go as employment has picked up a lot from the COVID-19 lows.
However, just like I had an America is Back recovery model on April 7, 2020, I have recession models and raise recession red flags as the expansion matures. In the previous month’s jobs report, I raised one of the flags as the unemployment rate got to 4% and the 2-year yield was above 0.56%, which means the Fed rate hike is on.
Once the Fed raises rates, the second recession red flag will be raised. My job is to show you the progress of the economic expansion, into the next recession, and out — over and over again. My models don’t sleep! Once more red flags are raised, I will go over each and every single one. At some point in the future, I will be on recession watch, when enough red flags are up. However, we are not in that time yet. Even though I no longer say we are early in the economic expansion, we are still on solid footing.
Mortgage delinquencies are up to 1.3%, which is the highest level since March 2020, meaning around 19,500 accounts are past due.
New mortgage lending is also down 27% year-on-year as the housing market takes a downturn.
A number of homeowners who bought during Covid will now have to re-fix their loans, putting interest rates relatively high compared to where they were.
The higher interest rates are making some people nervous.
“I’ve got friends who are obviously they’re a bit worried ’cause they’re coming up in the next month or so. No one’s looking forward to it,” one woman told 1News.
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“We are considering going back to Switzerland because mortgages and everything is just too high,” another woman said.
More on this topic
Mortgage advisor Dawn Whiteside says this reaction is understandable.
“I would imagine as well that there’s going to be quite a few people that are quite nervous out there,” she told 1News.
“These are probably the highest interest rates that we’ve seen for a number of years.”
Data firm Centrix said its latest figures confirm more are struggling to pay mortgages.
They’re also climbing — with 11.5% of mortgages in arrears.
ASB has just hiked its 12-month fixed rate to 7.25%. The bank said it’s held fixed rates for two years.
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It acknowledges the challenges of rising rates, particularly with the cost of living. It also said it’s “proactively engaging with customers to provide advice”.
Centrix said New Zealand has an economy of two halves, with some people fine and others struggling.
Personal loans are also a big worry.
“That tends to be people who are looking for short-term borrowing to try and bridge the gap between what they need in their bank account to meet their commitments for what they actually have,” Centrix managing director Keith McLaughlin said.
“So that’s the one I find the most disturbing.”
High-interest rates do help to keep inflation under control, but they’re also making it tough for many New Zealanders.
One silver lining is that unemployment is relatively low, so people with jobs have a good chance to renegotiate debt and manage tough times.
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“The really, really big main point is don’t bury your head in the sand. If you’re struggling, talk to somebody because there are options out there for you,” Whiteside said.
McLaughlin sees things easing later on in the year.
“I would’ve hoped at the end of October we may start to see things settle down where there is more confidence that there’s stability in interest rates.”
The Reserve Bank will make another call on interest rates next week.
Even if you have life insurance through work, you should give serious consideration to getting a private policy on the outside.
As the saying goes, never have all of your eggs in one basket, and that’s absolutely true for life insurance.
This became most evident during a conversation of someone seeking life insurance through me.@media(min-width:0px)#div-gpt-ad-goodfinancialcents_com-medrectangle-3-0-asloadedmax-width:300px!important;max-height:250px!important
The gentleman was in his late 40’s and was desperately seeking coverage. He had well over $1 million of life insurance coverage, but it was all through his work.
Why was this such a big issue?
Well, for starters he hated his job. It was super stressful and he was well past his breaking point.
He wanted to quit but was unable.
He was the sole provider for his family and because of a recent serious heart condition, he was unable to get outside life insurance coverage.
His wife forbid him from quitting until he lined up another job that offered similar coverage, but leaving would probably mean he would see a 30% drop in his salary.
With two kids, a mortgage, and other debts, she and her kids would be in financial ruin if he left his job and passed away.@media(min-width:0px)#div-gpt-ad-goodfinancialcents_com-banner-1-0-asloadedmax-width:580px!important;max-height:400px!important
This poor guy was stuck.
He was stuck in a job he hated because he never thought to take life insurance outside of his employer.
This is a just one example why only having life insurance through work is a BAD idea.@media(min-width:0px)#div-gpt-ad-goodfinancialcents_com-large-leaderboard-2-0-asloadedmax-width:300px!important;max-height:250px!important
“I Don’t Need More Life Insurance – I’m Covered at Work”
This is a common response to the question of life insurance by people who have life insurance through work. Usually, not much thought goes into determining if this cliché is even valid.
For example, most employer life insurance policies fall far short of the amount of coverage that you actually need. Your employer will have a type of life insurance chart that may offer you a $50,000 or $100,000 policy at no cost. But that will be totally inadequate if you have a young family and actually need something closer to $500,000 or more.
Some employers do offer supplemental life insurance coverage where you have to pay the premium for the additional coverage. While this may sound like a good option on the surface, it will still keep all of your life insurance with a single source.
And that presents a number of problems…
What If You Lose Your Job?
You may plan to stay on your current job for the rest of your life, but the reality probably won’t cooperate. According to the most recent data by the US Bureau of Labor Statistics (BLS), the average stay at a job is 4.2 years. Considering that a career may span 45 years, that’s what (?) – ten jobs over a lifetime?
An important factor that the BLS statistic doesn’t account for is the not-so-unusual practice of employers to reassign workers from employee-with-benefits status to unbenefited sub-contractors. It’s called “cutting payroll costs” and it plays well with Wall Street analysts and investors.
Ads by Money. We may be compensated if you click this ad.Ad
Then there’s also the possibility of experiencing extended periods of unemployment in between jobs. This becomes even more likely during recessions, when you may find yourself without a job or insurance coverage for many months.
Whether by separation or by reassignment, your current employer provided life insurance policy will come to an end at some point, and likely a lot sooner than you think.
Though you may simply assume that you can get a private plan at a later date when it becomes absolutely necessary, there’s a not so minor complication…
What If You Develop a Health Condition Before You Lose Your Job?
@media(min-width:0px)#div-gpt-ad-goodfinancialcents_com-leader-1-0-asloadedmax-width:580px!important;max-height:400px!importantThe standard advice when it comes to purchasing life insurance is to do it while you’re healthy. If you develop a health condition, and later lose your job, the option to purchase a private policy could disappear.
Certain health conditions can make it impossible to get a life insurance policy, particularly if that condition is fairly recent. And even if you can get policy, it will come with a risk adjusted premium, that will make it cost much more.
Keep Your Life Insurance Through Work – But Add a Third Party Policy
You certainly want to keep a life insurance through work policy, particularly if it’s one that you don’t have to pay for. But any additional coverage that you need should be through a private policy purchased outside of work.
Are you familiar with diversification as an investment strategy? It’s also valuable when it comes to purchasing life insurance. Your financial situation is more secure if you maintain policies through two or more completely separate entities.
As a life insurance agent, I can help you purchase a private policy. There are several reasons why this is better trying to buy a policy directly from a life insurance company:
My services will not cost you any more than buying the policy directly from the life insurance company.
I can handle all of the paperwork and nuances that are part of the life insurance application process – which you are probably totally unfamiliar with.
I can get you the best policy for your needs, at the lowest possible premium rate. In this way, using a life insurance agent will actually save you money on your policy.
I know who the better insurance companies are, and will place your application with those, so that you don’t waste time and application fees applying to companies that won’t be a good match.
In the event that you need to add additional insurance or even change policies in the future, I will be there to help you through the process.
Why You Should Lock in Your Rate on a Private Policy As Soon As Possible
Earlier I talked about the risk of developing a health condition before you lose your job, and how that can complicate (or even eliminate) your ability to get a private life insurance policy. But there’s another much more common reason why you should want to purchase a private life insurance policy, and do it right now:
Your life insurance premium will never be lower than it will be today.
That’s due to the simple fact that age is one of the major factors in determining life insurance premiums. If you are 30 years old right now, the premium on a private policy will be much lower today than it will be when you’re 40 or 50.
By locking in the premium rate on a long-term term life insurance policy now, you will spare yourself both the higher premiums that will come with age, and the possibility of being declined for poor health.
I’m ready by the phone any time you’re ready to move past “I don’t need more life insurance – I’m covered at work”. That assumption could be hazardous to your family’s financial health.
The pandemic took a toll on the U.S. employment market, with unemployment hitting a record high of 14.7% in April 2020.
For those still relying on unemployment, there’s another news item taking shape. A growing number of states have decided to end the extra $300 a week in unemployment assistance that was part of the American Rescue Plan. Here’s what you need to know if you’re affected by this change.
What’s Ahead:
Which states are affected?
For more than a year, if you were unemployed, you were able to apply to receive an extra $300 a week in unemployment compensation. This was part of the American Rescue Plan, which was designed to help Americans through the worst pandemic in a century.
But as more consumers are vaccinated, local governments are taking another look at the need for those extra payments. Some states have opted to end them altogether. In those states, eligible unemployed residents will go back to receiving the standard weekly unemployment payment.
Your first question is probably whether your state is affected. The problem is, the list is still growing. But as of today (June 3, 2021), 24 states are ending unemployment benefits. They are, in alphabetical order:
Alabama
Alaska
Arizona
Arkansas
Florida
Georgia
Idaho
Indiana
Iowa
Mississippi
Missouri
Montana
Nebraska
New Hampshire
North Dakota
Ohio
Oklahoma
South Carolina
South Dakota
Tennessee
Texas
Utah
West Virginia
Wyoming
If you’re receiving extra unemployment or Pandemic Unemployment Assistance (PUA), which is designated for freelancers and contract workers, it’s important to check into your state’s status. In most of the above states, both the $300 extra unemployment and PUA are ending early.
The $300 in extra weekly aid wasn’t going to last forever. It was set with a 2020 expiration date, which was extended to 2021. The original aid expired in December, but that expiration date was pushed back to September 6, 2021. If the remaining states don’t opt-out of the extra unemployment, those who qualify will continue to receive the boost in unemployment until September.
Each state that has chosen to opt-out has set its own deadline for ending unemployment. Below is a list of the end dates for each state:
June 12: Alaska, Iowa, Mississippi, Missouri.
June 19: Alabama, Idaho, Nebraska, New Hampshire, North Dakota, West Virginia, Wyoming.
June 26: Arkansas, Florida, Georgia, Ohio, Oklahoma, South Dakota, Texas, Utah.
June 27: Montana.
June 30: South Carolina.
July 3: Tennessee.
July 10: Arizona.
July 19: Indiana.
States offering incentives
If your state is on the above list, there might be some good news. In some states, governments are offering extra money for those who accept employment. Those states include:
Arizona: employees can qualify for a Return to Work Bonus of $2,000 for full-time work or $1,000 for part-time work after eight consecutive weeks of employment. You’ll need to begin this work between May 13 and Sept. 6.
Montana: eligible employees can qualify for a one-time, $1,200 Return to Work Bonus after completing four full weeks of paid work.
New Hampshire: through June 19, currently unemployed workers can qualify for a bonus of $500 for part-time employment and $1,000 for full-time employment.
Oklahoma: the Return to Work incentive offers eligible workers $1,200 after six weeks of full-time work.
Unemployment benefits cutoff
There’s another cutoff that applies to pandemic-era unemployment recipients. Each state has specific timeframes for collecting unemployment. In many states, six months is the limit. But during the pandemic, this cutoff was extended, with some states allowing people to claim unemployment for a full year or longer.
The pandemic has now passed the one-year mark, though, which means that the deadline might be approaching for many unemployed individuals. Whether you’re in a state that’s cutting off extended benefits or not, it’s important to pay close attention to your benefits’ end date. You may be able to apply for an extension, but there’s no guarantee your state unemployment office will grant it.
Getting back to work
Unfortunately, for many workers, heading back into the workforce isn’t as simple as landing a job. Daycares and schools face the same staffing shortages as many businesses, which means that parents have nowhere to send their children when they go back to work.
There’s also the issue of the lingering pandemic. Even in areas where vaccines are readily available, some employees are still concerned for their personal safety. For some, permanent remote work may be the only option. But when that isn’t available, workers face the tough choice of health versus paying the bills.
For those who are in the states that haven’t yet cut off unemployment benefits, there’s still a little time to sort things out. But if you’re in one of the states ending extra payments, it’s important to know what your options are.
What to do next
If your state is on the above list, you’re probably wondering what options you have. Here are a few things to do if you’ll soon be without that extra $300 a week.
Check with your unemployment office
Just because you’re reading online that your extra unemployment benefits are ending, that doesn’t mean there aren’t other options. Unemployment compensation is decided on a case-by-case basis, using laws set at the local level. Contact your local unemployment office and find out if there are options available to you.
Consider remote work
This obviously won’t be an option for everyone. But the good news is, the pandemic has made employers more open to remote work than ever. You can often search local job sites and find plenty of opportunities where you can work from home most of the time. There are also plenty of work-from-home opportunities in this list, but you can also search online for “remote work” or “work-from-home jobs” and find some options.
Look for a bridge job
If you’re able to work at least part-time, consider a bridge job. These jobs are designed solely to get you through until things return to normal. At that point, you’ll (hopefully) be able to land your dream job. In addition to letting you pay your bills, a bridge job also helps reduce those gaps in your resume that can be concerning to future employers.
Consider summer childcare options
Parents do have one thing working in their favor: it’s summertime. The need for remote learning is put on hold for now, and there are childcare opportunities that don’t exist in the fall and winter months. If your local daycares are understaffed, consider enrolling your children in a summer camp. Local organizations like the YMCA and Boy Scouts often have summer camp opportunities, for example.
Summary
In most states, the $300 in extra weekly compensation will continue for now. But it’s important to prepare for it to possibly end soon. Stay in touch with your local unemployment office and make sure you’re aware of all your options. Even if the extra $300 cuts off, you’ll likely still be eligible for a weekly unemployment check while you continue to look for work.
Mortgage rates have moved a little higher over the past twenty-four hours as investors breathe easier about trade-war concerns.
Tomorrow there is another possibility for rates to increase when we get the monthly jobs report for March.
That report will be released early in the morning. Read on for more details.
Where are mortgage rates going?
Rates rise as trade war concerns lessen
Financial market participants are nothing if not fickle.
As we’ve seen over the past few weeks, trade war concerns have cropped up and spooked investors out of stocks and into the perceived safety of government bonds.
That’s what happened early on this week, keeping mortgage rates lower.
However, that trend began to reverse itself yesterday, with more money moving into stocks, pushing Treasury yields higher.
The yield on the 10-year Treasury note moved up about six basis points in afternoon trading and is currently holding at those levels at 2.82%.
Mortgage rates typically move in the same direction as the 10-year yield, so they’ve increased from where they were yesterday morning.
Rate/Float Recommendation
Lock now before rates increase significantly
While mortgage rates might stay in a tight range for several weeks, long-term they are almost certainly going to wind up significantly higher than where they are right now.
That means that most borrowers will be better off locking in a rate on a purchase or refinance sooner rather than later.
Learn what you can do to get the best interest rate possible.
Today’s economic data:
Jobless Claims
Applications filed for U.S. unemployment benefits moved up 24,000 from the prior week to 242,000 for the week of 3/31/18. That puts the 4-week moving average at 228,250.
International Trade
The nation’s trade deficit widened to $57.6 billion in February.
Fedspeak
Atlanta Fed President Raphael Bostic at 1:00pm.
Notable events this week:
Monday:
PMI Manufacturing Index
ISM Manufacturing Index
Construction Spending
Fedspeak
Tuesday:
Wednesday:
ADP Employment Report
Fedspeak
PMI Services Index
Factory Orders
FOMC Minutes
ISM Non-Mfg Index
EIA Petroleum Status Report
Thursday:
Jobless Claims
International Trade
Fedspeak
Friday:
Monthly Jobs Report
*Terms and conditions apply.
Carter Wessman
Carter Wessman is originally from the charming town of Norfolk, Massachusetts. When he isn’t busy writing about mortgage related topics, you can find him playing table tennis, or jamming on his bass guitar.
In an effort to get a pulse on the industry and learn more about the tools available to help real estate agents grow their businesses, I sat down with Robert (Bob) Burns, Real Estate Coach, Trainer and Consultant with Leader’s Edge Training, to discuss the resources they offer for real estate professionals.
While there’s no shortage of training available in the marketplace for agents, I quickly learned that for those real estate agents who want to take their career to the next level there is a vacuum in the real estate training space that few – besides Leader’s Edge – are addressing.
In our discussion, Bob shared the fact that “there’s a whole other side of this conversation [i.e. agent training] that’s not talked about nearly enough, and that’s management…the management side of the real estate business. There’s little to no training available.”
Why is this important?
As an agent, maybe you’re thinking that’s no big deal…I’m great at selling, how hard can it be to manage a brokerage?
Ask anyone who’s done it though, and you’ll quickly realize that it’s a lot tougher. For example, how do you know if your commission plan is truly competitive in the marketplace?
Or if you have the right financial reports with the key information you need to manage the brokerage well? Are things slipping through the cracks, or are you on top of every little thing that needs done?
Maybe you were in management before you got into real estate. That’s great, but were you managing employees or independent contractors?
It’s different, you know…the dynamics are definitely not the same.
For example, if you were a sales manager in the retail industry the methods and processes you used to manage employees will not be the same as the ones you need as the manager of a brokerage firm.
“It becomes not about telling people what to do and having, you know, all of that discipline and structure,” said Bob, “it really is an exercise in leadership in generating followership, and building relationships and trust so that these independent contractors that are like, herding cats, will actually follow you to where you want to bring your organization. And that’s a whole other skillset for most people to develop.
“So I love working with managers to help them with their leadership skills, to build followership and also with the nuts and bolts of actually managing their service delivery, their financials, their process…all the stuff that’s required as kind of foundational to their business so they can do the fun leadership stuff and getting people to follow them and recruit agents to their firm and retain them so they stay and help their agents build their business.”
Interested in learning what makes him tick, I asked Bob about how he got into the business.
“I have basically only ever worked in the real estate business. I came out of college with an education background that I didn’t want to use. I found out that education wasn’t for me and I went in an interview with a local real estate company in South Minneapolis – Coldwell Banker Burnett.
“They walked me through the process to get licensed. I became licensed and started my career as a 20 year old kid trying to live in an apartment, trying to help people with their most valuable asset – their home – so I had to learn fast.
“What I love the most about it [real estate] is that your output is pretty much in proportion to the input. In other words, the more you put into it, the more you get out of it. The harder you work, the more you earn and the better you do.”
[PULL QUOTE HERE] “It’s really a meritocracy, and I love that about real estate.”
“Anyone with the right drive, and the right work ethic can come into real estate and make a respectable living for themselves and their family.”
But what should real estate agents expect from the training offered by Leader’s Edge Training?
There are four components to the training; learning, practice, implementation and accountability.
“With adult learners,” said Bob, “especially in a professional environment, we’ll tend not to just learn something for the sake of learning…it needs to be applicable.”
Agents who enroll in the training offered by Leader’s Edge will not only learn something new, they’ll have the opportunity to learn in a very specific way that will help them really retain what they learn.
They’ll learn through implementation and practice, in an environment where it’s safe to practice the skill before the stakes get high.
Also, agents will experience accountability.
Unlike other training programs there’s no “here’s what you need to know, go do it and have a nice day,” agents receive true accountability that will help them implement what they’ve learned in a practical way.
Their coach will question them…“did you do what you said you would? How did it go? What worked? What didn’t work?”, etc.
Bob noted that continuing education for most agents is thought of as “more of a passive, ‘getting my hours in’ type of learning.” Highlighting what makes him different, he notes that, “The training that I provide is more about making a behavioral change in your business, so you can run a more successful practice.”
If you’re an agent who wants to “create change and growth in your business, that leads to making more money and helping more people,” you’re just the kind of agent who would benefit from Leader’s Edge Training.
“The core program that I deliver with Leader’s Edge Training is a “six week, one day a week in-person course,” said Bob. “It’s an advanced course in real estate; everything you need to know and then some to run a successful business. We do before and after measurements; we’re very big on measurement.
“The average participant increases their business 217% versus what they were doing before they took the class,” continued Bob.
“The other component to it, is that while they’re with me during that six week period of high accountability, high motivation – and this really positive environment – the average participant in the class that I deliver will close six transactions that can be traced back to the activities they did with me in the course. It’s very, very measurable.”
In addition to the training, Leader’s Edge offers agents two other resources that can help them grow their business; an app and a podcast.
“The ‘Agent Success’ app that we developed allows you to put in your business goals as a real estate agent,” said Bob. “And it breaks those goals down into quarterly, monthly and weekly activities that you need to complete on a regular basis to reach those goals.
“So if you want to make a certain amount of money in real estate, you put in those goals; you put in how many weeks a year you want to work, and then every day when you wake up the app tells you exactly what to do, how many calls you need to make, how many mailers you need to do, how many doors you need to knock on, how many social media posts you need to make…it spells it all out for you.
“And you can keep track of your activities as you do them, much like a fitness app such as My Fitness Pal or Fitbit or whatever…you can track your activities. And it will kind of assign you points based on the activities that you’ve done. And if you do those activities, you’ll reach your goals and the app help you get to where you want to go.
“It’s available in the iTunes Store and in the Android Google Play Store. We’ve opened it up to everybody; it’s not just Leader’s Edge clients…we want to contribute to the growth of the real estate industry as a whole.
“We’ve made it available for free to all real estate professionals… they can go out and download it and start using it today.”
Without question, in my experience most real estate professionals love to help others achieve success. One such way they can do that is by sharing their knowledge through podcasts.
Bob’s podcast is called “How They Won” and is available on a number of platforms.
“Every week I interview top real estate professionals, mostly real estate agents,” said Bob, “but also people connected to the real estate industry…and they share the secrets of their success.
“The interviews are typically around 30 minutes, and while some episodes have gone as long as 60 minutes I try to keep it 30 to 40 minutes so you can listen as you walk around your commute or on the treadmill or the elliptical at the gym.
“There’s been a tremendous response…real estate agents like to learn from each other.
“And the other thing about about “How They Won”… as I was doing my market research, I noted that there are a handful of real estate podcasts that are out there.
“I’m a big podcast fan…I love podcasts…but the real estate podcasts that are out there, in general, with the exception of a very, very small few, from a quality and organization standpoint, I just find very difficult to listen to.
“So my goal with “How They Won” was to launch something that was of a very high, professional, listenable quality,” continued Bob, “and that was organized and succinct in a way that listeners could actually implement in a short period of time.
“For their time investment, I wanted them to be able to actually implement some of the things that they learned in the podcast.”
At the time of this writing we’re facing a moratorium on physical gatherings, so I asked Bob how he was adapting to the changes brought by the Coronavirus epidemic.
“What I’m doing right now, is a lot of what’s called mindset and motivational work. It’s very hard in this environment for people to do the right things; to hold themselves to a certain standard. They lose track of the discipline of running their business. You’re not going to close as many real estate transactions in this kind of environment.
“So the focus has shifted from a lot of action-based tasks (e.g. make these contacts, knock on these doors, or send out this mailer,) to more of a ‘where are you’, ‘where’s your head at today’. As a real estate agent what are you thinking about? How can we implement some structure in your day so that when we do wake up to a sunrise in the first day of a post COVID-19 real estate market you’re ready…you won’t miss a beat when the light turns green again.”
Taking the cue, I asked a question that I’m sure is on a lot of peoples’ minds; especially those of us in the real estate industry.
“What do you think the real estate industry as a whole is going to look like…at least for the United States after we get the ‘all clear’ so to speak?”
“It’s really hard to say,” said Bob. “I think it comes down to some basic economic factors. The biggest driver historically of real estate, contrary to what almost every written article wants you to believe, is not interest rates.
“Interest rates are not the biggest driver of the real estate market…it’s employment.
“Just like, you know, the old adage in real estate is ‘location, location, location’… the economics of this industry is ‘employment, employment employment’.
“So depending on how quickly we can get home buyers and home sellers back to work is going to shape whether this is a V shaped recovery or a U shaped recovery.
“For example, if you want to buy a house, typically you’re going to need a mortgage to buy it. Mortgage Lenders aren’t going to lend you money if you don’t have a job.
“So these four levels that we’re seeing in these layoffs; if we’re able to kind of sustain those small, medium and large businesses through however long this is, whether it’s weeks or months, if we’re able to keep those businesses open and they’re able to bring their workforce back to work, then I think this whole thing will have a very little impact on the real estate business as a whole.
“It’ll be a setback, but we have a whole bunch of built-up demand happening behind this dam. And when we’re back open for business, all of that pent-up demand is going to be satisfied. And we’re going to see a fast and full recovery.
“If on the other hand, we’re not able to keep these small, medium, large businesses to the point where they’re able to bring their workforce back in, and these unemployment claims that we’re seeing are permanent rather than temporary, I think it’s going to be a much slower recovery as new businesses have to become established to take the place of businesses that didn’t survive.
“And those business have to grow organically, and eventually get back to the point where they can have a payroll where we did pre COVID-19, then I think you’re looking at a much more protracted recovery or a much, much longer recovery if that happens.”
So what should agents be doing now, as we’re in a state of flux?
Unfortunately, we’re in uncharted territory right now, but one things that is vital for every agent to consider is to take the time to work on their mindset.
Social distancing, and in some cases, stay-at-home orders can wreak havoc on your mindset if you let it.
Pay attention to what you read, and what you listen to. Take care of yourself, your family, and your business and when possible, take advantage of this time to expand your knowledge so that you can hit the ground running when the time is right.
Anita Clark is a Warner Robins Real Estate Agent helping buyers and sellers in middle Georgia with all of their home buying or selling needs.Whether she is selling new construction homes, assisting first-time buyers, or helping military relocating to Houston County, she always puts her customers needs first.
Some softer than expected inflation data is keeping mortgage rates from moving out of the tight range that they’ve been in all week. Tomorrow we will get more inflation data, bringing with it the possibility of a rate adjustment before we head into the weekend. Read on for more details.
Where are mortgage rates going?
Rates flatten out again
Believe it or not there are some exciting weeks for mortgage rates. This has not been one of those weeks.
It’s not unexpected for the week following the monthly jobs report to be a dull one, so I can’t say I didn’t see it coming.
There just hasn’t been many significant economic reports out this week and the few reports that did get released weren’t much to talk about.
Today, we got the latest Consumer Prices Index reading, which came in slightly below expectations.
That means the inflation hawks will have to wait another day before they can rile up the troops with their talk of a quicker than expected tightening schedule from the Federal Reserve.
Here are the latest numbers in the Freddie Mac Primary Mortgage Market Survey:
The average rate on a 30-year fixed rate mortgage remained unchanged at 4.55% (0.5 points)
The average rate on a 15-year fixed rate mortgage fell two basis points to 4.01% (0.4 points)
The average rate on a 5/1-year adjustable rate mortgage rose eight basis points to 3.77% (0.3 points)
Here’s what their Economic & Housing Research group had to say about rates this week:
“The 30-year fixed mortgage rate remained at 4.55 percent over the past week.
The minimal movement of mortgage rates in these last three weeks reflects the current economic nirvana of a tight labor market, solid economic growth and restrained inflation. As we head into late spring, the demand for purchase credit remains rock solid, which should set us up for another robust summer home sales season.
While this year’s higher rates – up 50 basis points from a year ago – have put pressure on the budgets of some home shoppers, weak inventory levels are what’s keeping the housing market from a stronger sales pace.”
Rate/Float Recommendation
Locking now is likely the smart move
Mortgage rates are staying in a tight range for now but could very well be on track to increase substantially by the time 2019 rolls around.
At the very least, it’s far more likely that mortgage rates will rise than fall in the coming weeks and months.
So if you’re looking to buy a new home or refinance your current mortgage, the better option is likely to lock in a rate sooner rather than later.
Learn what you can do to get the best interest rate possible.
Today’s economic data:
Consumer Price Index
The consumer price index rose 0.2% month over month in April, putting it at 2.5% year over year. CPI less food and energy ticked up 0.1%, month over month putting it at 2.1% year over year.
Jobless Claims
Applications filed for U.S. unemployment benefits came in at 211,000 for the week of 5/5/18. That brings the four-week moving average to 216,000.
Bloomberg Consumer Comfort Index
The Bloomberg consumer comfort index hit a 55.8 for the week of 5/6/18.
Notable events this week:
Monday:
Tuesday:
NFIB Small Business Optimism Index
JOLTS
Wednesday:
PPI-FD
10-Yr Note Auction
Fedspeak
Thursday:
Consumer Price Index
Jobless Claims
Bloomberg Consumer Comfort Index
Friday:
Fedspeak
Consumer Sentiment
*Terms and conditions apply.
Carter Wessman
Carter Wessman is originally from the charming town of Norfolk, Massachusetts. When he isn’t busy writing about mortgage related topics, you can find him playing table tennis, or jamming on his bass guitar.